(Bloomberg Opinion) -- On Tuesday, U.S. antitrust officials began digging into whether past acquisitions made by technology giants such as Google and Facebook hurt competition and left them with too much power. On Tuesday, the U.S. also approved one of the most anticompetitive megadeals ever in the tech sphere.
Yes, that’s whiplash you feel. And it’s antitrust enforcement in the era of President Donald Trump.
The Federal Trade Commission said it ordered Google’s parent Alphabet Inc., as well as Amazon.com Inc., Apple Inc., Facebook Inc. and Microsoft Corp., to turn over information “on the terms, scope, structure, and purpose” of deals the companies did between 2010 and 2019. It’s taking a particular interest in smaller, more discreet transactions that, because of their size, may have slid past regulatory scrutiny at the time, but still might have set off red flags. Last summer, the Justice Department also began its own investigation into overreach by Big Tech.
The FTC’s latest move came just hours after a federal judge gave his blessing to T-Mobile US Inc.’s takeover of Sprint Corp., a deal that will consolidate the U.S. wireless market down to three national carriers by eliminating one of its lower-cost providers. The merger, when contemplated in years past, was considered dead on arrival because of the harm it might cause consumers. But last year, Ajit Pai, the chair of the Federal Communications Commission, and Makan Delrahim, the Justice Department’s antitrust chief, went ahead and approved the transaction.
Not only that, text messages revealed during the recent trial showed Delrahim was encouraging Charlie Ergen — a billionaire key to T-Mobile and Sprint getting their done — to lobby the FCC for help by telling him to ask his “senator friends” to contact Pai. Ergen’s Dish Network Corp. was Delrahim’s solution, albeit a weak one, to the antitrust concerns raised by the merger. The companies have agreed to give Dish access to their network while the satellite-TV provider builds its own 5G wireless service over the next few years, though by the time Dish wireless is up and running the damage of T-Mobile’s newfound pricing power may be done.
The two matters — Big Tech and T-Mobile-Sprint — provide a glimpse into the Trump administration’s contradictory view of antitrust regulation. The tech giants do probably need to be reined in, have been irresponsible with consumer data and have likely stifled competition by swallowing nascent rivals along the way. But they also happen to be companies Trump sees as unfriendly to his presidency, and at times it’s hard to untangle his administration’s efforts from the capricious reality-TV-show persona that’s out for personal vengeance. He's railed against Amazon and the low taxes it pays while also often voicing irritation at critical coverage of the White House by the Washington Post, which is owned by Amazon CEO Jeff Bezos.
When AT&T Inc. was trying to buy Time Warner, the parent of Trump’s perceived nemesis CNN, he repeatedly ordered Gary Cohn, then-director of the National Economic Council, to ensure the deal was stopped, according to a New Yorker article last March. Delrahim did sue to block the transaction, but the judge sided with the companies.
That makes Delrahim’s support of the T-Mobile-Sprint merger — which unlike the AT&T-Time Warner deal involves two direct competitors in an already highly concentrated market — all the more curious. My colleague Joe Nocera has labeled him the deal’s unofficial investment banker. With Trump, the rationale is less of a mystery: Proponents of the deal have argued that it will help the U.S. beat China in the race to 5G (although it’s unclear how blocking the deal would have the opposite effect).
Over at the FCC, the review of T-Mobile-Sprint was unusual as well and became fiercely divided along party lines. Pai, a Republican, broke with tradition by voicing his support for the transaction and securing concessions with the companies before his own agency colleagues (and counterparts at the DOJ) had the chance to complete their analyses. FCC Commissioner Jessica Rosenworcel, a Democrat, had said it looked “like some backroom dealing” and was “the worst of what people expect from Washington.” And as the FTC and DOJ now crack down on Big Tech, Pai is the figure responsible for repealing net neutrality.
It’s good that regulators are taking a closer look at tech deals, but mixed messages with political overtones aren’t helping the administration’s efforts. If it was truly interested in policing harmful deals, why did T-Mobile’s Sprint merger get such a glowing endorsement?
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Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.
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